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December 4-6, 2019 | Santa Barbara, CA

Senior Roundtable Annual MeetingShare. Connect. Experience.

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The Nexus Between ESG, Corporate Strategy

and Valuation

Speaker:

Melissa Adams, AVP & Chief Corporate Social Responsibility Officer, WGL

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Introduction

Melissa E. Adams

Chief Corporate Social Responsibility Officer

Washington Gas and WGL Holdings, Inc.

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Historical Perspective

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Accelerated Developments & Participation

2015 2016 2017 2018 2019 2020

Task Force on Climate-related Financial Disclosures (TCFD) (est) 1

Frameworks, Ratings & Rankings

Proxy & Credit Ratings

Raters and Rankings Trends & ESG Disclosure Convergence

Morningstar launch of Sustainability ratings for 20,000 funds

Glass Lewis proxy research & vote platform partnership with Sustainalytics

Moody’s credit rating ESG inclusion

ISS E&S Quality Score

Barron’s 100 Most Sustainable Annual Ranking (est)

© Copyright 2019. Next Level Investor Relations LLC

S&P credit rating ESG inclusion

Fitch credit rating ESG inclusion

GRESB participation grown to cover ESG performance of > 1,500 real estate & infrastructure funds, companies & assets 2

1 TCFD set up after the G20 pointed out that the current failure to price climate change into financial markets represents somewhat of a risk in terms of global financial stability

TCFD Climate-based reporting to become mandatory for PRI Signatories by 2020

2 GRESB is an investor driven benchmark for real assets

Morningstar acquired 40% stake in Sustainalytics

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Sustainability Reporting

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60% of Russell 1000® Are Publishing Sustainability Reports, G&A Institute’s 2018 Inaugural Benchmark Study Shows

BOTTOM HALF OF RUSSELL 1000 BY SECTORReporters vs. Non-Reporters

Percentage of Reporters vs. Non-Reporters◼ Reporters ◼ Non-Reporters

Source: Governance & Accountability Institute, Inc. 2018 Research – www.ga-institute.com

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Internal Sustainability Emphasis & Responsibility

Source: Greenbiz.com – State of the Profession 2018

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From IR to CSR

Melissa E. Adams

Chief Corporate Social Responsibility Officer

WGL/Washington Gas

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Disclaimer

The views, thoughts, and opinions expressed in this presentation and on the following slides are sole those of the presenter, and not necessarily those of the presenter’s employer or any organization(s) with which the presenter is or has been affiliated.

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Corporate Social Responsibility Priorities

Impact:Achieve measurable good in areas of importance to stakeholders

Shared Value:Select initiatives that resonate with and support business purpose

LeadershipCreate respect for our good works (beyond awareness)

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=

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Low Carbon Strategy

First annual GHG Emissions Inventory

Supplier Diversity SpendTarget set

2020 Sustainability Targets Announced(based on 2008 baseline)

Founding Partner EPA Methane ProgramWGL Exceeds

2020 GHG Targets

Sets 2025 Targets

Long-Term Climate Business Plan

Our Sustainability Journey (Overview)

SC LEED Building

Expanded Energy EfficiencyOffering

35% Supplier Diversity Spend &

Capital Fund

SEC “Notice And Access” Rule Merger with

AltaGas

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Four Steps

Identify societal objectivesWhat social, community or environmental issues do we want to address?

Make the Business CaseWhat business objectives can our CSR initiatives help advance?

Set Specific GoalsWith your objectives in mind, what are the program goals?

Develop MetricsIdentify the inputs, outputs and outcome that we will track

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Strategy

• Embed sustainability into corporate culture

• Demonstrate leadership

• Establish measurable indicators of commitment and progress

• Align behavior, operational activities and investment

• Drive value

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The Business Case: Driving Value

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Setting WGL Sustainability Priorities

• Nearly all corporate Scope I & II emissions generated by Utility (WG)

• 2008 GHG inventory emissions baseline boundary set for WG

• Governance and accountability can be aligned with management performance goals

• GHG emissions expressed as CO2e per ton is the generally accepted global sustainability reporting metric

• Targets align with recognized external reporting initiatives like CDP and GRI

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2020 Targets (set in 2011)

• Reduce absolute emissions from fleet and facilities 70 percent

• Reduce emissions intensity per delivered therm by 18 percent

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Publicly Announcing Targets

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Tracking Progress with Annual Goals

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Exceeding Expectations

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Celebrating Success With Stakeholders

Thanking Our Teams Public & Internal Videos Engaging Elected Officials Explaining How

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Why Do a Sustainability Report?

Connecting multiple story lines into an effective narrative defining corporate purpose

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Employee Volunteerism

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Supplier Diversity

• Since 2009 WGL has steadily increased its spend with diverse, minority and women-owned businesses

• AltaGas Merger Commitment targets 35% spend by 2028

• Many initiatives identified – including creation of $500,000 fund to help vendors access capital

Programming actualizes our diversity and inclusion values and benefits our customers, communities and employees

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ICE House

Corporate Giving

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Nothing succeeds like success …

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Collective Accountability – Corporate Scorecard

Aligning Rewards with Desired Outcomes

• Safety

• Supplier Diversity

• Employee Engagement

• Community Involvement

• Sustainability

• Corporate Giving

• Volunteerism

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Selecting a Reporting Framework

Who uses it Investors Investors, NGOs, labor, media,

employees, government, peers

Investors

Number of companies

reporting

2,000 7,500 2,500

Access to data Public Public Private

Topics covered • Climate change (GHG

emissions and mitigation)

• Forests (timber, palm oil,

cattle and soy)

• Water

• Supply chains (climate and

water risks)

• Broad CSR topics including

environmental, social and

governance e.g.:

• Climate change, emissions

• Human rights

• Corruption

• Labor management and

relations

• Corporate economic,

environmental and social

performance

• Corporate governance

• Risk management

• Climate change mitigation

• Supply chain standards

• Labor practices.

Rationale for reporting Provides transparency to

interested investors and

acknowledges that company

takes climate change

risks/opportunities seriously and

has an understanding of its

impacts.

Provides full scope of company’s

sustainability strategy to critical

external stakeholders and

demonstrates the company has a

process to identify and address

its material sustainability issues.

It is an exclusive list that a

company has to qualify for based

on broad range ESG metrics,

being on DJSI demonstrates to

investors that a company has

strong performance on

sustainability issues.

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Determining What Matters

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A Heavy Lift

Final version

releasedDraft4Draft

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Review2

By SMEs, +1s&

Full Doc ‘fresh eyes’

Draft 2Review Draft 1

by SMEsDraft 1Obtain Info

fromSMEs

Identify 40+Subject Matter Experts

Materiality Assessment

determines subjects

Designs presented

Preferred concept chosen

Design coordinated with brand/comms

Design finalized

Text / design combined

Final review

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At WGL, we recognize the scientific consensus that human

activity – primarily GHG emissions and the conversion of land for

agriculture and development – is contributing to changes in the

global climate including changing weather patterns, rising sea

levels and more extreme weather events.

Climate change presents risks to WGL and our operations, but

also provides us with an opportunity to be part of the solution.

These factors underlie our commitment to continued change and

improvement in our operations, and provide an evolving portfolio

of clean and renewable products and services to communities we

serve.

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Our 2017 Sustainability Report

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Framed on Sustainable Development Goals

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What are the Benefits?

Reputation ties to business results

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Recognized Leadership

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EPA: Grandfathered OUT

• Launch of the Methane Challenge Program, March 30, 2016.

• Voluntary program organized by industry.

• Helped forestall the promulgation of burdensome, one-size fits all regulation while achieving the same results.

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Shareholder Proxy Withdrawn

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Securing Merger Support

• CSR Initiatives & Outreach -> Strong Community Support for Merger

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Attracting, Retaining & Engaging Talent

Organizational Effectiveness Survey consistently identify Corporate Responsibility as a major driver of employee engagement

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Climate Business Plan: Redefining Our Company

“By January 1, 2020, AltaGas will file with the Commission a

long-term business plan on how it can evolve its business

model to support and serve the District's 2050 climate goals

(e.g., providing innovative and new services and products

instead of relying only on selling natural gas). After the

business plan is filed, AltaGas will hold bi-annual public

meetings to report on and discuss its progress on the

business plan.”

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Redefining Expectations: “Well Below 2oC”

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Summary

• Every company has its own journey

• Sustainability includes sustaining and growing the company

• Success earns you an invitation to take a seat at the table

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Q&A

Melissa E. Adams

Chief Corporate Social Responsibility Officer

Washington Gas and WGL Holdings, Inc.

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Speaker Bio

Melissa E. AdamsChief Corporate Social Responsibility Officer Washington Gas and WGL Holdings, Inc.

Ms. Adams is Chief Corporate Social Responsibility Officer for WGL where she serves as lead strategist for the design and implementation of ESG goals, policies and programs that benefit the company and the communities it serves. She works in collaboration with WGL’s Board and executive leadership to implement initiatives across all businesses that actualize corporate values and amplify brand positioning and business development while reducing risk. Ms. Adams works to minimize the effects the business has on the environment through both internal operations and the development of innovative new business models; promotes social objectives through corporate giving and volunteerism; and advances good governance and social equity through hiring, training, and procurement practices as well as other programming. Prior to leading this new function, Ms. Adams was Division Head for Utility Sales, Economic Development and Corporate Sustainability. Ms. Adams began her career at WGL as Chief Investor Relations Officer.

Prior to joining WGL, Ms. Adams led the Investor Relations function for a vertically integrated Fortune 500 energy company and was the founding Principal of an energy and environmental consulting practice that provided strategic management, public affairs, and communications support to government, association and corporate clients. She began her energy career at the Edison Electric Institute.

Ms. Adams has served and continues to serve on many appointed national and regional commissions, associations, and task forces devoted to addressing climate change and greenhouse gas emissions. She is a member of Leadership Greater Washington and Lead Virginia and a graduate of The George Washington University.